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AGM discharge agenda item: UBS BoD member Bruno Gehrig comments

Zurich / Basel
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28 Mar 2010, 08:00
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In the 28 March edition of the SonntagsZeitung, a Swiss newspaper, UBS Board of Directors (BoD) member Bruno Gehrig explained in an article the reasons the bank put the discharge of the 2007, 2008 and 2009 BoD and Group Executive Board (GEB) members on the agenda of the upcoming annual general meeting (AGM).

The most important points

In the last two years, UBS did not put the discharge on the AGM agenda because the bank wanted to clarify the causes of the losses in the US mortgage market and the misconduct in connection with its cross-border wealth management business in the US. Since then, the facts were examined in approx. 10 internal and external investigations. The Swiss banking regulator SFBC, today the FINMA, and independent external legal experts took part in these investigations.

All of these investigations showed organizational shortcomings but no evidence of criminal conduct of individual BoD or GEB members. Nevertheless UBS wanted to clarify if it should initiate a civil liability against former bodies of the bank. UBS commissioned two additional legal opinions that dealt with the question of the potential civil liability of individual senior executives. The evidence produced by these reviews showed that the outcome of potential litigation would be open, at best.

On 15 December UBS disclosed the BoD's decision not to initiate criminal complaints or any civil action against former UBS executives. It was more important to the BoD to concentrate all efforts of the bank on the implementation of necessary, forward-looking changes. At about the same time, the Criminal Authorities of the Canton of Zurich, in Switzerland, announced their conclusion that they did not find any actions by UBS executives that would make a criminal investigation necessary and they ceased their proceedings.

As UBS does not intend to take legal action against former corporate bodies, the proposal for the discharge at the AGM is a logical consequence. A possible discharge is only valid for the facts known at the time of the decision. In addition, shareholders can file a civil liability lawsuit for up to six months after the AGM  provided that they voted against the discharge or did not take part in the vote. Also, the right for the corporation to file arises again if new facts are disclosed.

The BoD highly respects the political institutions that supported the bank in critical situations. Therefore, UBS evaluated whether it should await the result of parliamentary investigations in Switzerland. This political process is important for Switzerland, and UBS will contribute its part. It, however, is not about the liability for potential misconduct of previous UBS bodies under Swiss corporate law. The assessment of this question is up to the AGM. By asking for discharge, the bank is not attempting to shun its past: We are confronting the question of civil liability and give our shareholders the right to decide.